Mar 31, 2018
i. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current /non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle.
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting date, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Based on the nature of products and services offered by the Company, operating cycle determined is 12 months for the purpose of current and non-current classification of assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents,
ii. Segment Reporting
The company identifies operating segments based on the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.
iii. Foreign Currencies Transaction and balances
Transactions in foreign currencies are initially recorded by the company in their functional currency at the exchange rate prevailing on the date of transaction..
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency using rate of exchange prevailing on the balance sheet date.
Exchange differences arising on the settlement or translation of monetary items are recognized in the statement of profit or loss except where:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
- exchange differences on transactions entered into in order to hedge certain foreign currency risks
- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
iv. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Sale of services
The Company recognizes revenue on accrual basis when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method of recognizing the revenues and costs depends on the nature of the services rendered. Revenue is recognized when no significant uncertainty exists as to its realization or collection. Commission income is recognized on earned basis for activities performed in different services delivered at Vakrangee Kendra.
The Company executes the delivery in various e-governance projects at its Vakrangee Kendraâs. Revenue for the Company accrues on successful delivery and confirmation by the business associate involved. The Company estimates successful delivery based on past trends and complexities involved in delivery and revenue is accounted accordingly till the confirmation is received. Any deviation with the actual confirmation is accounted in the period in which the actual results are known to the Company.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
- the company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The amount recognised as revenue in its Statement of Profit and Loss is exclusive of Indirect tax (Service Tax, Goods & Service Tax (GST) and Value Added Taxes (VAT)) and is net of discounts.
Interest Income
Interest income from financial assets is recognized when it is probable that economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that assetâs net carrying amount on initial recognition.
Dividend Income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
v. Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replaced part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The cost of an item of property, plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Subsequent to recognition, property, plant and equipment (excluding freehold land) are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the company recognizes such parts as individual assets with specific useful lives and depreciation respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement cost only if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and useful lives.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over the useful lives, using the straight- line method (âSLMâ). Management, based on a technical evaluation, believes that the useful lives of the assets reflect the periods over which these assets are expected to be used, which are as follows:
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sale proceeds and the carrying amount of the asset and is recognised in profit or loss.
vi. Intangible Asset
Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any.
Intangible assets consist of rights under licensing agreement and software licences which are amortised over license period which equates the useful life ranging between 2-5 years on a straight-line basis.
vii. Taxation
Income tax expense comprises current tax expense and the net charge in the deferred tax asset or liability during the year. Current and deffered taxes are recognized statement of profit and loss except to the extent that it relates to items recognized directly in other comprehensive income or equity in which case it is recognized in other comprehensive income or equity respectively.
Current taxes
Current income tax is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The Company offsets, on a year to year basis, the current tax assets and liabilities, where it has legally enforceable right to do so and where it intends to settle such assets and liabilities on a net basis.
Deferred taxes
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax relating to items recognised outside the profit and loss is recognised (either in other comprehensive income or in equity)
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
viii. Fair Value measurement
The Company measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 âValuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 âValuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
ix. Investment property
Investment properties are properties that is held for long-term rentals yields or for capital appreciation (including property under construction for such purposes) or both, and that is not occupied by the Company, is classified as investment property.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Investment properties are depreciated using the straight-line method over their estimated useful lives. The useful life has been determined based on technical evaluation performed by the management expert.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
x. Impairment of Non-Financial Assets
At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized in the profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset ( or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset ( or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
xi. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
a) Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
b) Subsequent measurement
Debt Instruments at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate method. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognized in profit or loss when the asset is derecognised or impaired.
Debt instrument at Fair Value through Other Comprehensive Income (OCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate method. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment gains or losses and foreign exchange gains and losses in the statement of profit and loss. On derecognition of the asset, the cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit and loss.
Debt instrument at Fair Value through Profit or Loss (FVTPL)
A financial asset which does not meet the criteria for categorization as at amortized cost or as fair value through other comprehensive income is classified as fair value through profit or loss. Debt instruments subsequently measured at fair value through profit or loss are measured at fair value with all changes recognized in the statement of profit and loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Dividends from such investments are recognized in profit or loss as other income. There is no recycling of the amounts from OCI to Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments subsequently measured at fair value through profit or loss are measured at fair value with all changes recognized in the statement of profit and loss.
Investment in subsidiaries is carried at cost less impairment in the financial statements.
c) De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the company balance sheet) when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognise the transferred asset to the extent of the companyâ-s continuing involvement. In that case, the company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
d) Impairment of financial assets
The Company recognises impairment loss applying the expected credit loss (ECL) model on the financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual right to receive cash or other financial asset and financial guarantee not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12 months expected credit losses.
For trade receivables or any contractual right to receive cash or other financial assets that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company applies âsimplified approachâ permitted by Ind AS 109 Financial Instruments. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Financial Liabilities
a) Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
b) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the company that are not designated as hedging instruments in hedge relationships as defined by Ind-AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Such amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
c) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
xii. Inventories
Inventories are valued at lower of cost on First-In-First-Out (FIFO) or net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of purchased inventory is determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
xiii. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the lessee is classified as a finance lease.
Finance Lease as a lessee
Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating Lease as a lessee
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of the time pattern in which economic benefits from leased assets are consumed. The aggregate benefit of incentives (excluding inflationary increases) provided by the lessor is recognized as a reduction of rental expense over the lease term on a straight-line basis. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
xiv. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets that necessarily takes a substantial period of time to get ready for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
xv. Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
xvi. Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
xvii. Provisions
Provisions are recognised when the Company has a present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
xviii. Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Payments in respect of such liabilities, if any are shown as advances.
xix. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- Weighted average number of equity shares that would have been outstanding assuming the conversion of all the dilutive potential equity.
xx. Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), and highly liquid time deposits that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
xxi. Employee Benefits Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeeâs services up to the end of the reporting period and are measured at the undiscounted amounts of the benefits expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other Long-term employee benefit obligations
The liabilities for compensated absences (annual leave) which are not expected to be settled wholly within 12 months after the end of the period in which the employee render the related service are presented as non-current employee benefits obligations. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the Projected Unit Credit method. The benefits are discounted using the market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligations. Remeasurements as a result of experience adjustments and changes in actuarial assumptions (i.e. actuarial losses/ gains) are recognised in Other comprehensive income..
The obligations are presented as current in the balance sheet if the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Post- employment obligations
The Company operates the following post-employment schemes:
I. Defined benefit plans such as gratuity
II. Defined contribution plans such as provident fund.
Defined benefit plan - Gratuity Obligations
The Company provides for gratuity, a defined benefit plan (the âGratuity Planâ) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment.
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is actuarially determined using the Projected Unit Credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash flows outflows by reference to market yields at the end of the reporting period on government bonds that have a terms approximating to the terms of the obligation.
The net interest cost, calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of the plan assets, is recognised as employee benefit expenses in the statement of profit and loss.
Remeasurements gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the other comprehensive income in the year in which they arise and are not subsequently reclassified to Statement of Profit and Loss.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined Contribution Plan
The Company pays provident fund contributions to publicly administered provident funds as per local regulatory authorities. The Company has no further obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.
xxii. Share-based Payments
Shared based compensation benefits are provided to employees via Vakrangee Limited Employee Stock Option Plan.
Employee options
The cost of equity-settled transactions is determined by the fair value of the options granted at the date when the grant is made. The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:
- including any market performance conditions (e.g., the Companyâs share price)
- excluding the impact of any service and non-market performance vesting conditions ( e.g. profitability, sales growth targets and remaining employee of the entity over a specified time period), and
- Including the impact of any non-vesting conditions (e.g. the requirement for employee to save or holding shares for a specific period of time.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates of the number of options that are expected to be vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Mar 31, 2017
i. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current /non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle.
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting date, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Based on the nature of products and services offered by the Company, operating cycle determined is 12 months for the purpose of current and non-current classification of assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
ii. Segment Reporting
The company identifies operating segments based on the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.
iii. Foreign Currencies
The companyâs financial statements are presented in INR (rounded off to lakhs), which is also the companyâs functional currency.
Transaction and balances
Transactions in foreign currencies are initially recorded by the company in their functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting period.
Exchange differences arising on the settlement of monetary items or on translating monetary items are recognized in the statement of profit or loss except
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
- exchange differences on transactions entered into in order to hedge certain foreign currency risks
- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
iv. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Sale of services
The Company recognizes revenue on accrual basis when the significant terms of the arrangement are enforceable, services have been delivered and the collectability is reasonably assured. The method of recognizing the revenues and costs depends on the nature of the services rendered. Revenue is recognized when no significant uncertainty exists as to its realization or collection. Commission income is recognized on earned basis for activities performed in different services delivered at Vakrangee Kendra.
The Company executes the delivery in various e-governance projects at its Vakrangee Kendraâs. Revenue for the Company accrues on successful delivery and confirmation by the business associate involved. The Company estimates successful delivery based on past trends and complexities involved in delivery and revenue is accounted accordingly till the confirmation is received. Any deviation with the actual confirmation is accounted in the period in which the actual results are known to the Company.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
- the company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The amount recognised as revenue in its Statement of Profit and Loss is exclusive of Service Tax and Value Added Taxes (VAT), and is net of discounts.
Interest Income
Interest income from financial assets is recognized when it is probable that economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that assetâs net carrying amount on initial recognition.
Dividend Income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
v. Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replaced part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The cost of an item of property, plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Subsequent to recognition, property, plant and equipment (excluding freehold land) are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the company recognizes such parts as individual assets with specific useful lives and depreciation respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement cost only if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and useful lives.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over the useful lives, using the straight- line method (âSLMâ). Management, based on a technical evaluation, believes that the useful lives of the assets reflect the periods over which these assets are expected to be used, which are as follows:
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sale proceeds and the carrying amount of the asset and is recognised in profit or loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1, 2015 measured as per the previous GAAP as the deemed cost of the property, plant and equipment.
vi. Taxation
Current taxes
Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity respectively. Current income tax is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The Company offsets, on a year to year basis, the current tax assets and liabilities, where it has legally enforceable right to do so and where it intends to settle such assets and liabilities on a net basis.
Deferred taxes
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax relating to items recognised outside the profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity)
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
vii. Fair Value measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique
In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
viii. Investment property
Investment properties are properties that is held for long-term rentals yields or for capital appreciation (including property under construction for such purposes) or both, and that is not occupied by the Company, is classified as investment property.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Investment properties are depreciated using the straight-line method over their estimated useful lives. The useful life has been determined based on technical evaluation performed by the management expert.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transition to Ind AS
The Company has elected to continue with the carrying value for all of its investment property as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., 1st April 2015.
ix. Impairment of Non-Financial Assets
At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized in the profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset ( or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
x. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
a) Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
b) Subsequent measurement
Debt Instruments at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate method. A gain or loss on a debt investment that is subsequently measured at amortised cost is recognized in profit or loss when the asset is derecognised or impaired.
Debt instrument at Fair Value through Other Comprehensive Income (OCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate method. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment gains or losses and foreign exchange gains and losses in the statement of profit and loss. On derecognition of the asset, the cumulative gain or loss previously recognised in OCI is reclassified from equity to statement of profit and loss.
Debt instrument at Fair Value through Profit or Loss (FVTPL)
A financial asset which does not meet the criteria for categorization as at amortized cost or as fair value through other comprehensive income is classified as fair value through profit or loss. Debt instruments subsequently measured at fair value through profit or loss are measured at fair value with all changes recognized in the statement of profit and loss.
Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Dividends from such investments are recognized in profit or loss as other income. There is no recycling of the amounts from OCI to Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments subsequently measured at fair value through profit or loss are measured at fair value with all changes recognized in the statement of profit and loss.
Investment in subsidiaries is carried at cost in the financial statements.
c) De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the company balance sheet) when:
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognise the transferred asset to the extent of the companyâs continuing involvement. In that case, the company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
d) Impairment of financial assets
The Company recognises impairment loss applying the expected credit loss (ECL) model on the financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual right to receive cash or other financial asset and financial guarantee not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12 months expected credit losses.
For trade receivables or any contractual right to receive cash or other financial assets that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company applies âsimplified approachâ permitted by Ind AS 109 Financial Instruments. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Financial Liabilities
a) Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
b) Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the comapny that are not designated as hedging instruments in hedge relationships as defined by Ind-AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ loss are not subsequently transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Such amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
c) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss
d) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
xi. Inventories
Inventories are valued at lower of cost on First-In-First-Out (FIFO) or net realizable value after providing for obsolescence and other losses, where considered necessary. Cost of inventories comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost of purchased inventory is determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
xii. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the lessee is classified as a finance lease.
Finance Lease as a lessee
Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating Lease as a lessee
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of the time pattern in which economic benefits from leased assets are consumed. The aggregate benefit of incentives (excluding inflationary increases) provided by the lessor is recognized as a reduction of rental expense over the lease term on a straight-line basis. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
xiii. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets that necessarily takes a substantial period of time to get ready for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
xiv. Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
xv. Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
xvi. Provisions
Provisions are recognised when the Company has a present obligation, legal or constructive, as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
xvii. Contingent Liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. The Company does not recognize a contingent liability but discloses its existence in the financial statements. Payments in respect of such liabilities, if any are shown as advances.
xviii. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- Weighted average number of equity shares that would have been outstanding assuming the conversion of all the dilutive potential equity.
xix. Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), and highly liquid time deposits that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
xx. Employee Benefits
- Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeeâs services up to the end of the reporting period and are measured at the undiscounted amounts of the benefits expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
- Other Long-term employee benefit obligations
The liabilities for compensated absences (annual leave) which are not expected to be settled wholly within 12 months after the end of the period in which the employee render the related service are presented as noncurrent employee benefits obligations. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the Projected Unit Credit method. The benefits are discounted using the market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligations. Remeasurements as a result of experience adjustments and changes in actuarial assumptions (i.e. actuarial losses/ gains) are recognised in the Statement of Profit and Loss.
The obligations are presented as current in the balance sheet if the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
- Post- employment obligations
The Company operates the following post-employment schemes:
I. Defined benefit plans such as gratuity
II. Defined contribution plans such as provident fund.
Defined benefit plan - Gratuity Obligations
The Company provides for gratuity, a defined benefit plan (the âGratuity Planâ) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment.
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is actuarially determined using the Projected Unit Credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash flows outflows by reference to market yields at the end of the reporting period on government bonds that have a terms approximating to the terms of the obligation.
The net interest cost, calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of the plan assets, is recognised as employee benefit expenses in the statement of profit and loss.
Remeasurements gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the other comprehensive income in the year in which they arise and are not subsequently reclassified to Statement of Profit and Loss.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined Contribution Plan
The Company pays provident fund contributions to publicly administered provident funds as per local regulatory authorities. The Company has no further obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.
xxi. Share-based Payments
Shared based compensation benefits are provided to employees via Vakrangee Limited Employee Stock Option Plan.
Employee options
The cost of equity-settled transactions is determined by the fair value of the options granted at the date when the grant is made. The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:
- including any market performance conditions (e.g., the Companyâs share price)
- excluding the impact of any service and non-market performance vesting conditions ( e.g. profitability, sales growth targets and remaining employee of the entity over a specified time period), and
- Including the impact of any non-vesting conditions (e.g. the requirement for employee to save or holding shares for a specific period of time)
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates of the number of options that are expected to be vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Mar 31, 2016
Vakrangee Limited (''''the Company'''') is a public company domiciled in
India and incorporated in May 1990 under the provisions of the
Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and
National Stock Exchange in India.
Vakrangee Limited along with its subsidiaries, Vakrangee e-Solutions
Inc. (Philippines), Vakrangee Finserve Ltd. provides diverse solutions,
activities in e-governance sector with special competencies in handling
massive, multi-state, and e-governance enrollment projects and software
and IT solutions, Data Digitization, etc.
A. Basis of Accounting
These financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rules, 2006 notified by the Central Government in exercise
of the power conferred under sub- section (1) (a) of section 642 and
the relevant provisions of the Companies Act, 1956 read with the Rule 7
of Companies (Accounts) Rules, 2014 in respect of section 133 of the
Companies Act, 2013 (the "Act") and Accounting Standard-30 ''Financial
Instruments: Recognition and Measurement'' issued by the Institute of
Chartered Accountants of India to the extent it does not contradict any
other accounting standard referred to in section 133 of the Act. The
financial statements have been prepared on a going concern basis under
the historical cost convention on accrual basis. The accounting
policies have been consistently applied by the Company unless otherwise
stated.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current - non current classification of
assets and liabilities.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and estimates are recognized in the period in which the results
are known / materialised.
C. Recognition of Income & Expenditure
Revenue is recognized when it is earned and no significant uncertainty
exists as to its realisation or collection. The Company recognizes
revenue when the significant terms of the arrangement are enforceable,
services have been delivered and the collectability is reasonably
assured. The method of recognizing the revenues and costs depends on
the nature of the services rendered.
The Company follows the accrual basis of accounting except in the
following cases, where the same are recorded on cash basis on
ascertainment of right and obligation.
i. Insurance Claim
ii. Dividend Income, if any.
D. Fixed Assets and Intangible Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any. Cost includes all expenditure necessary to
bring the asset to its working condition for its intended use. Own
manufactured assets are capitalized inclusive of all direct costs and
attributable overheads. Capital work-in-progress comprises of advances
paid to acquire fixed assets and the cost of fixed assets that are not
yet ready for their intended use as at the balance sheet date. In the
case of new undertaking, preoperative expenses are capitalized upon the
commencement of commercial production.
Intangible assets are recorded at the consideration paid for their
acquisition. Cost of an internally generated asset comprises all
expenditure that can be directly attributed, or allocated on a
reasonable and consistent basis, to creating, producing and making the
asset ready for its intended use.
The carrying amounts of the assets belonging to each cash generating
unit (CGU) are reviewed at each balance sheet date to assess whether
they are recorded in excess of their recoverable amounts and where
carrying amounts exceed the recoverable amount of the assets belonging
to CGU, assets are written down to their recoverable amount. Further,
assets held for disposal are stated at the lower of the net book value
or the estimated net realizable value.
E. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets". Where the recoverable
amount of any fixed assets is lower than its carrying amount, a
provision for impairment loss on fixed assets is made
F. Depreciation / Amortisation
i. With the applicability of Companies Act, 2013 with effect from April
1, 2014, depreciation / amortisation is provided on the Straight Line
Method (SLM) unless otherwise mentioned, pro-rata to the period of use
of assets and is based on management''s estimate of useful lives of the
fixed assets or the useful lives as specified in Part C of Schedule II
to the Companies Act, 2013, and accordingly the deprecation rates have
been taken as follows:
* The useful lives of these assets have been taken as per estimation of
the management since their purchase and has been amortised accordingly,
which resulted into acceleration of the depreciation at higher rate as
compared to the depreciation rate given under the Schedule XIV of the
Companies Act, 1956 (i.e. before the applicability of the Companies
Act, 2013) and has continued with the earlier useful lives in the
current year.
As per the provisions of Note 7 of Para C of Schedule II of the
Companies Act, 2013, the carrying amount of the existing assets as on
April 1, 2014:
- will be depreciated over the remaining useful life of the asset as
per this Schedule
- in cases where the remaining useful life of an asset is nil, the
residual value has been transferred to the retained earnings.
Depreciation on assets acquired/sold during the year is provided on
prorata basis.
G. Investments
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
H. Valuation of inventories
Inventories are valued at lower of cost or net realizable value.
I. Lease
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognized as
operating leases. The lease agreements contain rent escalation clause.
Lease rental expenses including escalations for operating leases are
recognized in the Profit and Loss Account on a straight-line basis over
the minimum lease term.
Assets leased by the Company in its capacity as lessee, where the
Company has substantially all the risks and rewards of ownership are
classified as finance lease. Such leases are capitalised at the
inception of the lease at lower of the fair value or the present value
of the minimum lease payments and a liability is recognized for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
J. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
K. Foreign Currency Transactions
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
L. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to accounts.
Disputed demands in respect of income tax and other proceeding are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
M. Accounting for Taxation of Income Current taxes
Income Tax is accrued in the same period the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowance or other matters is probable. MAT paid in
accordance with the tax laws, which gives rise to future economic
benefits in the form of tax credit against future tax liability, is
recognized as an asset in the Balance sheet if there is convincing
evidence that the group will pay normal tax after the tax holiday
period and the resultant assets can be measured reliably. The Company
offsets, on a year to year basis, the current tax assets and
liabilities, where it is its legally enforceable right and where it
intends to settle such assets and liabilities on a net basis
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax and assets or liabilities are recognized in the period
that includes the enactment date. Deferred tax Assets are recognized
only to the extent there is virtual certainty that the assets can be
realized in the future. Deferred Tax Assets are reviewed as at each
Balance Sheet date.
N. Retirement benefits of the Employee:
The Company has both defined contribution and defined benefit plans of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in case of some defined
contribution plans, by the Company along with its employees.
- Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company
provides for a lump sum payment to eligible employees, at retirement or
termination of employment based on the last drawn salary and years of
employment with the company. The gratuity fund is managed by the Life
Insurance Corporation of India (LIC). The Company''s gratuity benefit
scheme is a defined benefit plan. The company''s obligation in respect
of the gratuity plan is provided by for based on actuarial valuation
carried out by an independent actuary using the projected unit credit
method. The Company recognizes actuarial gains and losses immediately
in the profit and loss account.
- Provident fund, State Insurance, Labour Welfare Fund, Professional
Tax
These are the defined contribution plans in which the Company pays
pre-defined amounts to separate funds. The Company''s contributions to
these funds are reported as an expense during the period in which the
employees perform services that the payment covers.
- Compensated Absences
The employees of the Company are entitled to compensate absence. The
employees can carry forward a portion of the unutilized accrued
compensated absence and utilize it in future periods or receive cash
compensation at retirement at retirement or termination of employment
for the unutilized accrued compensated absence. The company follows the
cash basis of accounting for recording the obligation of leave
encashment. In other words, the company records an obligation for
compensated absences in the period in which it has been encashed by the
employees.
- Employee Stock Option Plan (ESOP)
In respect of employee''s stock options, the excess of market price on
the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
Mar 31, 2015
Note 1
Vakrangee Limited (''''the Company'''') is a public company domiciled in
India and incorporated in May 1990 under the provisions of the
Companies Act, 1956. Its shares are listed on Bombay Stock Exchange and
National Stock Exchange in India. During the previous year, the Company
has changed its name from "Vakrangee Software''s Limited" to "Vakrangee
Limited" w.e.f. October 1, 2013 and has received the fresh Certificate
of incorporation from the Registrar of Companies to this effect.
Vakrangee Limited along with its subsidiaries, Vakrangee e-Solutions
Inc. (Philippines), Vakrangee Finserve Ltd. provides diverse solutions,
activities in e-governance sector with special competencies in handling
massive, multi-state, and e-governance enrollment projects and software
and IT solutions, Data Digitization, etc.
A. Basis of Accounting
These financial statements have been prepared to comply with the
Accounting Standards referred to in the Companies (Accounting
Standards) Rules, 2006 notified by the Central Government in exercise of
the power conferred under sub- section (1) (a) of section 642 and the
relevant provisions of the Companies Act, 1956 read with the Rule 7 of
Companies (Accounts) Rules, 2014 in respect of section 133 of the
Companies Act, 2013 (the "Act") and Accounting StandardÂ30 ''Financial
Instruments: Recognition and Measurement'' issued by the Institute of
Chartered Accountants of India to the extent it does not contradict any
other accounting standard referred to in section 133 of the Act. The
financial statements have been prepared on a going concern basis under
the historical cost convention on accrual basis. The accounting
policies have been consistently applied by the Company unless otherwise
stated.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and services and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current  non current classification of assets
and liabilities.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual results
and estimates are recognized in the period in which the results are
known / materialised.
C. Recognition of Income
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection. The Company recognizes
revenue when the significant terms of the arrangement are enforceable,
services have been delivered and the collectability is reasonably
assured. The method of recognizing the revenues and costs depends on
the nature of the services rendered.
The Company follows the accrual basis of accounting except in the
following cases, where the same are recorded on cash basis on
ascertainment of right and obligation.
i. Insurance Claim
ii. Dividend Income, if any.
D. Fixed Assets and Intangible Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any. Cost includes all expenditure necessary to
bring the asset to its working condition for its intended use. Own
manufactured assets are capitalized inclusive of all direct costs and
attributable overheads. Capital work-in-progress comprises of advances
paid to acquire fixed assets and the cost of fixed assets that are not
yet ready for their intended use as at the balance sheet date. In the
case of new undertaking, preoperative expenses are capitalized upon the
commencement of commercial production.
Intangible assets are recorded at the consideration paid for their
acquisition. Cost of an internally generated asset comprises all
expenditure that can be directly attributed, or allocated on a
reasonable and consistent basis, to creating, producing and making the
asset ready for its intended use.
The carrying amounts of the assets belonging to each cash generating
unit (CGU) are reviewed at each balance sheet date to assess whether
they are recorded in excess of their recoverable amounts and where
carrying amounts exceed the recoverable amount of the assets belonging
to CGU, assets are written down to their recoverable amount. Further,
assets held for disposal are stated at the lower of the net book value
or the estimated net realizable value.
E. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets". Where the recoverable
amount of any fixed assets is lower than its carrying amount, a
provision for impairment loss on fixed assets is made.
iii. As per the provisions of Note 7 of Para C of Schedule II of the
Companies Act, 2013, the carrying amount of the existing assets as on
April 1, 2014 :
- will be depreciated over the remaining useful life of the asset as
per this Schedule
- in cases where the remaining useful life of an asset is nil, the
residual value has been transferred to the retained earnings. iv.
Depreciation on assets acquired/sold during the year is provided on
prorata basis.
G. Investments
Investments that are intended to be held for more than a year, from
the date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
H. Valuation of inventories
Inventories are valued at lower of cost or net realizable value.
I. Lease
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognised as
operating leases. The lease agreements contain rent escalation clause.
Lease rental expenses including escalations for operating leases are
recognised in the Profit and Loss Account on a straight-line basis over
the minimum lease term.
Assets leased by the Company in its capacity as lessee, where the
Company has substantially all the risks and rewards of ownership are
classified as finance lease. Such leases are capitalised at the inception
of the lease at lower of the fair value or the present value of the
minimum lease payments and a liability is recognised for an equivalent
amount. Each lease rental paid is allocated between the liability and
the interest cost so as to obtain a constant periodic rate of interest
on the outstanding liability for each year.
J. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
K. Foreign Currency Transactions
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
L. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to accounts.
Disputed demands in respect of income tax and other proceeding are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
M. Accounting for Taxation of Income
Current taxes
Income Tax is accrued in the same period the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowance or other matters is probable. MAT paid in
accordance with the tax laws, which gives rise to future economic
benefits in the form of tax credit against future tax liability, is
recognised as an asset in the Balance sheet if there is convincing
evidence that the group will pay normal tax after the tax holiday
period and the resultant assets can be measured reliably. The Company
of sets, on a year to year basis, the current tax assets and
liabilities, where it is its legally enforceable right and where it
intends to settle such assets and liabilities on a net basis.
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
Profits offered for income taxes and the Profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax and assets or liabilities are recognized in the period
that includes the enactment date. Deferred tax Assets are recognized
only to the extent there is virtual certainty that the assets can be
realized in the future. Deferred Tax Assets are reviewed as at each
Balance Sheet date.
N. Retirement benefits of the Employee:
The Company has both defined contribution and defined benefit plans of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in case of some defined
contribution plans, by the Company along with its employees.
Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company
provides for a lump sum payment to eligible employees, at retirement or
termination of employment based on the last drawn salary and years of
employment with the company. The gratuity fund is managed by the Life
Insurance Corporation of India (LIC). The Company''s gratuity benefit
scheme is a defined benefit plan. The company''s obligation in respect of
the gratuity plan is provided by for based on actuarial valuation
carried out by an independent actuary using the projected unit credit
method. The Company recognises actuarial gains and losses immediately
in the Profit and loss account.
Provident fund, State Insurance, Labour Welfare Fund, Professional Tax
These are the defined contribution plans in which the Company pays
pre-defined amounts to separate funds. The Company''s contributions to
these funds are reported as an expense during the period in which the
employees perform services that the payment covers.
Compensated Absences
The employees of the Company are entitled to compensate absence. The
employees can carry forward a portion of the unutilized accrued
compensated absence and utilize it in future periods or receive cash
compensation at retirement or termination of employment for the
unutilized accrued compensated absence. The company follows the cash
basis of accounting for recording the obligation of leave encashment.
In other words, the company records an obligation for compensated
absences in the period in which it has been encashed by the employees.
Employee Stock Option Plan (ESOP)
In respect of employee''s stock options, the excess of market price on
the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
Mar 31, 2014
(A) Detailed note on the terms of the rights, preferences and
restrictions relating to each class of shares including restrictions on
the distribution of dividends and repayment of capital.
i) The Company has only one class of Equity Shares having a par value
of Rs. 1/- per share. Each holder of Equity Share is entitled to one vote
per share. The Company declares and pays dividend in Indian Rupees.
During the year ended March 31, 2014, the amount of per share dividend
recognised as distributions to Equity Shareholders is Rs. 0.25 per share
of Rs. 1/- each. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
General Meeting.
ii) In the event of liquidation of the Company, the holders of Equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of Equity shares held by the
shareholders.
iii) During the previous year, the Company had issued bonus shares in
the ratio of one fully paid-up equity share for every equity share held
on April 13, 2012 being the record date.
During the year, the Company has issued 9,82,920 equity shares of Rs. 1/-
each on exercise of options granted under the employee stock option
plan (ESOP) wherein part consideration was received in the form of
employee services.
Hence, the company has issued total 61,58,940 shares during the period
of five years immediately preceding the reporting date on exercise of
options granted under the ESOP scheme.
(f) Detailed note on shares reserved to be issued under options and
contracts (ESOPs or Loans) / commitment for the sale of shares (without
payment being received in cash) divestments including the terms and
conditions.
The Company had formulated Employees Stock Option Scheme, 2008 (ESOP
Scheme) which was approved by the members of the Company at their
meeting held on September 23, 2008, as modifed on January 10, 2011 & on
June 1, 2012.
Employees covered under Stock Option Plans are granted an option to
purchase shares of the company at the respective exercise prices,
subject to requirements of vesting conditions. These options generally
vest over a period of four years from the date of grant for Grants 1 to
5 and six years from the date of grant for Grant 6 onwards. Upon
vesting, the employees can acquire one equity share for every option.
The stock compensation cost is computed under the intrinsic value
method and amortized on a straight line basis over the total vesting
period of four years & six years accordingly. For the year ended March
31, 2014, the company has recorded stock compensation expense of Rs.
227.70 Lacs (net) (Previous year Rs. 280.38 Lacs). During the year, the
Company has reversed the deferred employee compensation expenses
amounting Rs. 79.32 Lacs (Previous Year Rs. Nil) towards 10,93,000 options
lapsed out of the Grant 4.
The Remuneration & Compensation committee of the Board evaluates the
performance and other criteria of employees and approves the grant of
options. These options vest with employees over a specified period
subject to fulfllment of certain conditions. Upon vesting, employees
are eligible to apply and secure allotment of Company''s shares at a
price determined on the date of grant of options.
The options once granted to an eligible employee gets lapsed with the
resignation / termination of the employment with the Company. However,
the unvested / unexercised portion of the ESOP entitlement to that
employee remain part of the respective grant out of which it was issued
& they can be granted to any other eligible employee as decided by the
Remuneration & Compensation Committee.
Note : The Remuneration & Compensation Committee has been authorised to
make amendments in the ESOP Scheme - 2008, with regard to the number of
shares for every option granted & the price to be revised, to give
efect of stock split & bonus issue announced by way of postal ballot
during the year.
(g) Detailed terms of any securities convertible into shares, e.g. in
the case of convertible warrants, debentures, bonds etc.
The Company has issued 250.00 Lacs fully convertible warrants to M/s.
Vakrangee Capital Private Limited at value of Rs. 100/- per warrant. The
warrants issued are convertible into equal no. of equity shares having
face value of Rs. 1/- with premium of Rs. 99/- per share. An amount
equivalent to 40.56% of the total consideration i.e. Rs. 101.40 Cr. was
received before the issuance of the warrants. Balance amount towards
the warrant application money shall be received before the conversion
of the warrants. The warrants shall be convertible any time from the
date of allotment but before the expiry of 18 months from the date of
allotment.
(b) Terms of repayment of term loans and other loans.
i) Term Loan from Banks :
1. The Company has entered into a Common Loan Agreement amounting to Rs.
225.00 Crores sanctioned by nationalised and private banks.
The initial interest rate in respect of all the lenders shall be 13%
p.a. payable with monthly rests irrespective of the individual interest
rates mentioned in respective lenders'' sanction letters, subject to
further change in Base Rate till date of documentation. The highest
rate of interest of any lender shall be applicable and payable by the
Company to all the lenders. The interest spread reset shall be done
every 2 years from the date of frst disbursement. The loan is to be
repaid in 14 unequal quarterly installments commencing after moratorium
period of six months from the date of frst disbursement / LC opening.
First installment shall be due at the end of six months, thereby total
tenor of the loan to be 45 months.
2. The Company has taken a fresh term loan of Rs. 25.00 Crores during
the year. Present rate of interest is 12.50% p.a. The loan is to be
repaid in 16 quarterly installments of Rs. 1.56 Crore starting from
availability-cum-moratorium period of 15 months from the date of frst
disbursement. First installment shall be due in the last quarter of the
financial year 2014-2015, thereby total tenor of the loan will be 63
months.
3. The Company has taken a term loan in the form of External
Commercial Borrowings (ECBs) of USD 10 Million during the previous
year. The borrowings are made at an interest rate equal to the sum of
LIBOR and the Margin as specified in the Term Loan Facility Agreement.
The payment of interest to be made quarterly. Present rate of interest
is 3.561% p.a. The loan is to be repaid in 12 quarterly installments
starting from June 30, 2014, with frst 11 installments in equal amounts
& the amount of the last i.e. twelth installment being the balance of
principal pending for repayment, thereby total tenor of the loan to be
five years.
The Company has entered into a Cross Currency & Interest Rate Swap
facility for hedging of the ECB repayments (principal and interest). By
way of this swap facility, the rate of interest has been fixed at 9.62%
p.a. for complete tenor of the term loan. The spot reference rate for
repayment of the said loan has been fixed at Rs. 56.08 for 1 USD.
The bank has sanctioned Loan Equivalent Value (LEV) of Rs. 6.493 Cr under
currency swap facility. Negative Mark-to-Market threshold limit for
margin call has been fixed at Rs. 5.00 Cr. In case, the net payables
exceed the exposure, the Bank has the right to call for additional
deposit margin forthwith to maintain the exposure within the threshold
limit. The Company shall deposit cash collateral as per Bank''s
instructions, if negative MTM exceeds Rs. 5.00 Cr.
ii) Term Loan from NBFC, carries an interest rate equal to the sum of
Reference Benchmark rate and the Interest spread as specified in the
Loan agreement. Present rate of interest is 13% w.e.f. 7th November
2013. The interest payment to be made monthly. Principal repayment
shall be in monthly equal installments for 36 months from the date of
drawdown.
Obligation under finance lease are repayable in 36 monthly equal
installments. These obligations carry an interest rate of 14.00% p.a.
(c) Nature of security of each type of secured loans.
i) Term Loans from Banks (existing) :
1. First pari-passu charge on entire UID kits purchased out of the
term loan.
2. Second parri-passu charge on current assets of the Company.
3. Second parri-passu charge on moveable assets of the Company.
4. Second parri-passu charge through mortgage on the ofce premises of
the Company, situated at Marol Co-Operative Industrial Society & Hind
Saurashtra Industries Co-Operative Society Limited, Marol, Andheri
(East), Mumbai.
5. Second pari passu charge on the assets financed through ECB
facility.
6. Lien on Fixed Deposit amounting to Rs. 3.50 Crores held with the
Banks.
7. Personal Guarantee of Mr. Dinesh Nandwana, Chairman & Managing
Director of the Company.
ii) Term Loans from Banks (fresh loan) :
1. First pari-passu charge by way of hypothecation on micro ATM,
Financial Inclusion (FI) kits and assets purchased out of the said
rupee term loan.
2. Second pari-passu charge on all the present and future current
assets of the Company.
3. First charge on the designated bank account through which all the
revenues and receivables of all the FI centres will be routed.
4. First charge on the Debt Service Reserve account (DSRA) and any
other bank account of the company with respect to proposed FI project.
5. Second pari-passu charge on the movable fixed assets of the company
(present & future), except micro ATMs and other FI kits.
6. Second parri-passu charge through mortgage on the ofce premises of
the Company, situated at Marol Co-Operative Industrial Society & Hind
Saurashtra Industries Co-Operative Society Limited, Marol, Andheri
(East), Mumbai.
7. Second pari-passu charge on ofce premise of Vakrangee Technologies
Limited, situated at Marol Co-Operative Industrial Society, Marol,
Andheri (East), Mumbai.
8. Second pari-passu charge on property situated at Deer Park, New
Delhi.
9. Personal Guarantee of Mr. Dinesh Nandwana, Chairman & Managing
Director of the Company & Corporate Guarantee of Vakrangee Technologies
Limited.
iii) Term Loans from Banks - External Commercial Borrowings (ECB) :
1. First charge on all moveable and immoveable fixed assets financed out
of the term loan, with a minimum asset cover ratio of 1.33 times.
2. Second parri-passu charge on all assets of the Company excluding
those financed through this term loan.
3. Second pari passu charge on the UID kits procured from existing
term loans availed from banks.
4. Personal Guarantee of Mr. Dinesh Nandwana, Chairman & Managing
Director of the Company.
iv) Term Loans from NBFC :
1. First pari-passu charge on all present and future moveable fixed
assets of the Company excluding, UID kits financed by existing term from
banks & assets financed from ECB facility.
2. First pari passu charge on all the immovable properties of the
company acquired after March 31, 2011.
3. First parri-passu charge through mortgage on the ofce premises of
the Company, situated at Marol Co- Operative Industrial Society & Hind
Saurashtra Industries Co-Operative Society Limited, Marol, Andheri
(East), Mumbai & on the ofce premises of the Company situated at
Chandigarh.
4. Second pari-passu charge on all present and future current assets.
5. Second pari-passu charge on UID kits financed by existing term
loans.
6. Second pari passu charge on the assets financed through ECB
facility.
7. Personal Guarantee of Mr. Dinesh Nandwana, Chairman & Managing
Director of the Company.
v) Finance Lease facility :
Obligations under finance lease are secured against fixed assets obtained
under finance lease arrangements.
(d) Details of the aggregate of each loan guaranteed by directors or
others, each head-wise.
All the term loans amounting to Rs. 8,602.66 Lacs (P.Y. Rs. 14,345.77 Lacs)
guaranteed by Mr. Dinesh Nandwana, Chairman and Managing Director of
the Company.
(e) Details of continuing default in the repayment of loans and
interest, specifying the period and amount separately in each case.
There has been no default in the repayment of loans or interest thereon
as on date.
(b) Nature of security of each type of secured loans.
a) Loans repayable on demand from Banks :
The Company had entered into a Security Trustee Agreement for availing
the working capital facilities under the consortium banking
arrangement, aggregating to Rs. 525.00 Crores & the limit has been
enhanced from December 26, 2013 to Rs. 650.00 Crores.
These facilities are secured against the following charge on various
assets of the Company :
1. Primary : First pari-passu charge on the entire current assets of
the Company, both present & future.
2. Collateral :
- First pari-passu charge on the entire movable fixed assets of the
Company (excluding UID kits financed by existing term loans & assets
financed from ECB facility) both present & future.
- First pari-passu charge on entire lands & ofce premises of the
company & of Vakrangee Technologies Limited, situated at Marol
Co-Operative Industrial Society & Hind Saurashtra Industries
Co-Operative Society Limited, Marol, Andheri (East), Mumbai.
- Firsst Pari passu change on residential house at Chandigarh.
- Second pari-passu charge on the UID kits purchased from the existing
term loan facilities.
- Second pari-passu charge on the assets financed through ECB facility.
3. Corporate Guarantee of Company, Vakrangee Technologies Limited.
4. Personal Guarantee of Mr. Dinesh Nandwana, Chairman & Managing
Director of the Company.
b) Loans and advances from Related Parties
For details, refer Note 36.
(c) Details of the aggregate of each loan guaranteed by directors or
others, each head-wise.
All the loans repayable on demand from banks amounting to Rs. 30,639.02
Lacs (P. Y. Rs. 26,954.98 Lacs) guaranteed by Mr. Dinesh Nandwana,
Chairman and Managing Director of the Company.
(d) Details of continuing default in the repayment of loans and
interest, specifying the period and amount separately in each case.
There has been no default in the repayment of loans or interest thereon
as on date.
Mar 31, 2013
Vakrangee Softwares Limited (The Company) is a public company domiciled
in India and incorporated in May 1990 under the provisions of the
Companies Act, 1956. Its shares are listed on Bombay stock exchange and
National Stock Exchange in India. Vakrangee Softwares Limited along
with its subsidiaries eDoc Vision Infotech Pvt. Ltd., Vakrangee
e-Solutions Inc. (Philippines), Vakrangee Finserve Ltd. provides
diverse solutions, services in e-governance sector with special
competencies in handling massive, multi-state, and e-governance
enrollment projects and software and IT solutions, Data Digitisation,
Data Management System and Print Management System.
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention, on a going concern concept and in compliance with the
Accounting Standards notified by the Companies (Accounting Standard)
Rules, 2006 and the relevant provisions of the Companies Act, 1956.
Accounting policies not specifically referred to otherwise, are
consistent and in consonance with the generally accepted accounting
principles.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and estimates are recognized in the period in which the results
are known / materialised.
C. Recognition of Income
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection. The Company recognizes
revenue when the significant terms of the arrangement are enforceable,
services have been delivered and the collectability is reasonably
assured. The method of recognizing the revenues and costs depends on
the nature of the services rendered.
The Company follow the accrual basis of accounting except in the
following cases, where the same are recorded on cash basis on
ascertainment of right and obligation.
i) Insurance Claim
ii) Dividend Income, if any
D. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any. Cost includes all expenditure necessary to
bring the asset to its working condition for its intended use. Own
manufactured assets are capitalized inclusive of all direct costs and
attributable overheads. Capital work-in-progress comprises of advances
paid to acquire fixed assets and the cost of fixed assets that are not
yet ready for their intended use as at the balance sheet date. In the
case of new undertaking, preoperative expenses are capitalized upto the
commencement of commercial production.
Intangible assets are recorded at the consideration paid for their
acquisition. Cost of an internally generated asset comprises all
expenditure that can be directly attributed, or allocated on a
reasonable and consistent basis, to creating, producing and making the
asset ready for its intended use.
The carrying amounts of the assets belonging to each cash generating
unit (CGU) are reviewed at each balance sheet date to assess whether
they are recorded in excess of their recoverable amounts and where
carrying amounts exceed the recoverable amount of the assets CGU,
assets are written down to their recoverable amount. Further, assets
held for disposal are stated at the lower of the net book value or the
estimated net realizable value.
E. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets". Where the
recoverable amount of any fixed assets is lower than its carrying
amount, a provision for impairment loss on fixed assets is made.
F. Depreciation
i. Depreciation is provided on the Straight Line Method (SLM) unless
otherwise mentioned, pro- rata to the period of use of assets and is
based on management''s estimate of useful lives of the fixed assets or
at rates specified in Schedule XIV to the Companies Act, 1956,
whichever is higher:
ii) Depreciation on assets acquired/sold during the year is provided on
prorata basis.
G. Investments
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
H. Valuation of inventories
Inventories are valued at lower of cost or net realizable value.
I. Lease
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognised as
operating leases. The lease agreements contain rent escalation clause.
Lease rental expenses including escalations for operating leases are
recognised in the Profit and Loss Account on a straight-line basis over
the minimum lease term.
Assets leased by the Company in its capacity as lessee, where the
Company has substantially all the risks and rewards of ownership are
classified as finance lease. Such leases are capitalised at the
inception of the lease at lower of the fair value or the present value
of the minimum lease payments and a liability is recognised for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
J. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
K. Foreign Currency Transactions
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year- end are recognized in the
Profit and Loss Account.
L. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to accounts.
Disputed demands in respect of income tax and other proceeding are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
M. Accounting for Taxation of Income Current taxes
Income Tax is accrued in the same period the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowance or other matters is probable. MAT paid in
accordance with the tax laws, which gives rise to future economic
benefits in the form of tax credit against future tax liability, is
recognised as an asset in the Balance sheet if there is convincing
evidence that the group will pay normal tax after the tax holiday
period and the resultant assets can be measured reliably. The Company
offsets, on a year to year basis, the current tax assets and
liabilities, where its legally enforceable right and where it intends
to settle such assets and liabilities on a net basis.
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax and assets or liabilities are recognized in the period
that includes the enactment date. Deferred tax Assets are recognized
only to the extent there is virtual certainty that the assets can be
realized in the future. Deferred Tax Assets are reviewed as at each
Balance Sheet date.
N. Retirement benefits of the Employee:
The Company has both defined contribution and defined benefit plans of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in case of some defined
contribution plans, by the Company along with its employees.
- Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company
provides for a lump sum payment to eligible employees, at retirement or
termination of employment based on the last drawn salary and years of
employment with the company. The gratuity fund is managed by the Life
Insurance Corporation of India (LIC). The Company''s gratuity benefit
scheme is a defined benefit plan. The company''s obligation in respect
of the gratuity plan is provided by for based on actuarial valuation
carried out by an independent actuary using the projected unit credit
method. The Company recognises actuarial gains and losses immediately
in the profit and loss account.
- Provident fund, State Insurance, Labour Welfare Fund, Professional
Tax
These are the defined contribution plans in which the Company pays
pre-defined amounts to separate funds. The Company''s contributions to
these funds are reported as an expense during the period in which the
employees perform services that the payment covers.
- Compensated Absences
The employees of the Company are entitled to compensate absence. The
employees can carry forward a portion of the unutilized accrued
compensated absence and utilize it in future periods or receive cash
compensation at retirement at retirement or termination of employment
for the unutilized accrued compensated absence. The company follows the
cash basis of accounting for recording the obligation of leave
encashment. In other words, the company records an obligation for
compensated absences in the period in which it has been encashed by the
employees.
- Employee Stock Option Plan (ESOP)
In respect of employee''s stock options, the excess of market price on
the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
Mar 31, 2012
Vakrangee Softwares Limited (The Company) is a public company domiciled
in India and incorporated in May 1990 under the provisions of the
Companies Act, 1956. Its shares are listed on Bombay stock exchange
and National Stock Exchange in India. Vakrangee Softwares Limited along
with its subsidiaries Vakrangee IT Solution Ltd., e-Doc Vision Infotech
Pvt. Ltd., Vakrangee e-Solutions Inc. (Philippines), Vakrangee Finserve
Ltd. provides diverse solutions, services in e-governance sector with
special competencies in handling massive, multi-state and e-governance
enrollment projects and software and IT solutions, Data Digitisation,
Data Management System and Print Management System.
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention, on a going concern concept and in compliance with the
Accounting Standards notified by the Companies (Accounting Standard)
Rules, 2006 and the relevant provisions of the Companies Act, 1956.
Accounting policies not specifically referred to otherwise, are
consistent and in consonance with the generally accepted accounting
principles.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and estimates are recognized in the period in which the results
are known / materialised.
C. Recognition of Income
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection.
The Company follow the accrual basis of accounting except in the
following cases, where the same are recorded on cash basis on
ascertainment of right and obligation.
i. Insurance Claim
ii. Dividend Income, if any.
D. Change in Accounting Policies
Presentation & disclosure of financial statements: During the year
ended March 31, 2012, the Revised Schedule VI notified under the
Companies Act, 1956 has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
E. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any. Cost includes all expenditure necessary to
bring the asset to its working condition for its intended use. Own
manufactured assets are capitalized inclusive of all direct costs and
attributable overheads. Capital work-in-progress comprises of advances
paid to acquire fixed assets and the cost of fixed assets that are not
yet ready for their intended use as at the balance sheet date. In the
case of new undertaking, preoperative expenses are capitalized upto the
commencement of commercial production.
Intangible assets are recorded at the consideration paid for their
acquisition. Cost of an internally generated asset comprises all
expenditure that can be directly attributed, or allocated on a
reasonable and consistent basis, to creating, producing and making the
asset ready for its intended use.
The carrying amounts of the assets belonging to each cash generating
unit (CGU) are reviewed at each balance sheet date to assess whether
they are recorded in excess of their recoverable amounts and where
carrying amounts exceed the recoverable amount of the assets CGU,
assets are written down to their recoverable amount. Further, assets
held for disposal are stated at the lower of the net book value or the
estimated net realizable value.
F. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets". Where the recoverable
amount of any fixed assets is lower than its carrying amount, a
provision for impairment loss on fixed assets is made.
G. Depreciation
i. Depreciation is provided on the Straight Line Method (SLM) unless
otherwise mentioned, pro-rata to the period of use of assets and is
based on management's estimate of useful lives of the fixed assets or
at rates specified in Schedule XIV to the Companies Act, 1956,
whichever is higher:
H. Investments
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
I. Valuation of inventories
Inventories are valued at lower of cost or net realizable value.
J. Lease
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognised as
operating leases. The lease agreements contain rent escalation clause.
Lease rental expenses including escalations for operating leases are
recognised in the Profit and Loss Account on a straight-line basis over
the minimum lease term.
K. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
L. Foreign Currency Transactions
i. The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii. The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii. Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year- end are recognized in the
Profit and Loss Account.
M. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to accounts.
Disputed demands in respect of income tax and other proceeding are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
N. Accounting for Taxation of Income Current taxes:
Income Tax is accrued in the same period the related revenue and
expenses arise. A provision is made for income tax annually based on
the tax liability computed after considering tax allowances and
exemptions. Provisions are recorded when it is estimated that a
liability due to disallowance or other matters is probable. MAT paid in
accordance with the tax laws, which gives rise to future economic
benefits in the form of tax credit against future tax liability, is
recognised as an asset in the Balance sheet if there is convincing
evidence that the group will pay normal tax after the tax holiday
period and the resultant assets can be measured reliably. The Company
offsets, on a year to year basis, the current tax assets and
liabilities, where its legally enforceable right and where it intends
to settle such assets and liabilities on a net basis.
Deferred taxes:
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax assets or liabilities are recognized in the period that
includes the enactment date. Deferred tax Assets are recognized only to
the extent there is virtual certainty that the assets can be realized
in the future. Deferred Tax Assets are reviewed as at each Balance
Sheet date.
O. Retirement benefits of the Employee:
The Company has both defined contribution and defined benefit plans of
which some have assets in special funds or similar securities. The
plans are financed by the Company and in case of some defined
contribution plans, by the Company along with its employees.
- Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company
provides for a lump sum payment to eligible employees, at retirement or
termination of employment based on the last drawn salary and years of
employment with the company. The gratuity fund is managed by the Life
Insurance Corporation of India (LIC). The Company's gratuity benefit
scheme is a defined benefit plan. The company's obligation in respect
of the gratuity plan is provided by for based on actuarial valuation
carried out by an independent actuary using the projected unit credit
method. The Company recognises actuarial gains and losses immediately
in the profit and loss account.
- Provident fund, State Insurance, Labour Welfare Fund, Professional
Tax
These are the defined contribution plans in which the Company pays
pre-defined amounts to separate funds. The Company's contributions to
these funds are reported as an expense during the period in which the
employees perform services that the payment covers.
- Compensated Absences
The employees of the Company are entitled to compensate absence. The
employees can carry forward a portion of the unutilized accrued
compensated absence and utilize it in future periods or receive cash
compensation at retirement or termination of employment for the
unutilized accrued compensated absence. The company follows the cash
basis of accounting for recording the obligation of leave encashment.
In other words, the company records an obligation for compensated
absences in the period in which it has been encashed by the employees.
- Employee Stock Option Plan (ESOP)
In respect of employee's stock options, the excess of market price on
the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period.
Mar 31, 2011
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention, on a going concern concept and in compliance with the
Accounting Standards notified by the Companies (Ac- counting Standard)
Rules, 2006 and the relevant provisions of the Companies Act 1956.
Accounting policies not specifically referred to otherwise, are
consistent and in consonance with the generally accepted accounting
principles.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and es- timates are recognized in the period in which the
results are known / materialised.
C. Recognition of Income
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection.
The Company follow the accrual basis of accounting except in the
following cases, where the same are recorded on cash basis on
ascertainment of right and obligation.
i. Leave encashment
ii. Insurance Claim
iii. Dividend Income, if any.
D. Fixed Assets
Fixed Assets are stated at actual cost of acquisition less ac-
cumulated depreciation and impairment, if any. Cost includes all
incidental expenses related to acquisition and attributable cost of
bringing the asset to its working condition for its in- tended use.
E. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed as- sets by considering the
indication that an impairment loss may
have occurred in accordance with Accounting Standard 28 on "Impairment
of Assets". Where the recoverable amount of any fixed assets is lower
than its carrying amount, a provision for impairment loss on fixed
assets is made.
F. Depreciation
i) Depreciation on Fixed Assets has been provided on 'Straight Line
Method' as per the rates specified in Schedule XIV of the Companies
Act, 1956.
ii) Depreciation on assets acquired/sold during the year is provided on
prorata basis.
G. Investments
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term invest- ment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term invest- ments being current
investments are valued at cost or fair market value whichever is lower.
H. Employee Benefits
The Company has both defined contribution and defined bene- fit plans
of which some have assets in special funds or similar securities. The
plans are financed by the Company and in case of some defined
contribution plans, by the Company along with its employees.
- Gratuity
In accordance with the Payment of Gratuity Act, 1972, the company
provides for a lump sum payment to eligible employ- ees, at retirement
or termination of employment based on the last drawn salary and years
of employment with the company. The gratuity fund is managed by the
Life Insurance Corpora- tion of India (LIC). The Company's gratuity
benefit scheme is a defined benefit plan. The company's obligation in
respect of the gratuity plan is provided for based on actuarial
valuation carried out by an independent actuary using the projected
unit credit method. The Company recognises actuarial gains and losses
immediately in the profit and loss account.
- Provident fund, State Insurance, Labour Welfare Fund, Professional
Tax
These are the defined contribution plans in which the Company
pays pre-defined amounts to separate funds. The Company's contributions
to these funds are reported as an expense during the period in which
the employees perform services that the payment covers.
- Compensated Absences
The employees of the Company are entitled to compensate absence. The
employees can carry forward a portion of the unutilized accrued
compensated absence and utilize it in future periods or receive cash
compensation at retirement or termination of employment for the
unutilized accrued compensated absence. The company follows the cash
basis of accounting for recording the obligation of leave encashment.
In other words, the company records an obligation for compensated
absences in the period in which it has been encashed by the employees.
- Employee Stock Option Plan (ESOP)
In respect of employee's stock options, the excess of market price on
the date of grant over the exercise price is recognised as deferred
employee compensation expense amortised over vesting period
I. Valuation of inventories
Inventories are accounted for at cost, determined on FIFO (Weighted
Average Method, if it followed) basis, or net realizable value,
whichever is less.
J. Lease
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognised as
operating leases. The lease agreements con- tain rent escalation
clause. Lease rental expenses including escalations for operating
leases are recognised in the Profit and Loss Account on a straight-line
basis over the minimum lease term.
K. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
L. Foreign Currency Transactions
i) The transactions in foreign currencies are recorded at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
M. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to ac- counts.
Disputed demands in respect of income tax and other proceedings are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
N. Accounting for Taxation of Income
Current taxes
Provision for current income-tax is recognized in accordance with the
provisions of Indian Income-tax Act, 1961 and is made annually based on
the tax liability after taking credit for tax allowances and
exemptions.
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax and assets or liabilities are recognized in the period
that includes the enactment date. Deferred tax Assets are recognized
only to the extent there is virtual certainty that the assets can be
realized in the future. Deferred Tax Assets are reviewed as at each
Balance Sheet date.
Minimum Alternative Tax Credit
Minimum Alternative Tax (MAT) paid in accordance with tax laws, which
give rise to future economic benefits in the form of adjustment of
future tax liability, is recognized as an asset only when, based on
convincing evidence, it is probable that the future economic benefits
associated with it will flow to the company and the asset can be
measured reliably.
Mar 31, 2010
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention, on a going concern concept and in compliance with the
Accounting Standards notified by the Companies (Accounting Standard)
Rules, 2006 and the relevant provisions of the Companies Act 1956. The
Company follows mercantile system of accounting and recognizes income &
Expenditure on accrual basis to the extent measurable and where there
is certainty of ultimate realization in respect of incomes. Accounting
policies not specifically referred to otherwise, are consistent and in
consonance with the generally accepted accounting principles.
B. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amount of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and estimates are recognized in the period in which the results
are known / materialise.
C. Recognition of Income & Expenditure
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection. The Company follow the
accrual basis of accounting except in the following cases, where the
same are recorded on cash basis on ascertainment of right and
obligation.
i) Leave encashment
ii) insurance Claim
iii) Dividend Income, if any.
D. Fixed Assets
Fixed Assets are stated at actual cost of acquisition less accumulated
depreciation. Cost includes all incidental expenses related to
acquisition and attributable cost of bringing the asset to its working
condition for its intended use.
E. Impairment of Fixed Assets
At the end of each year, the Company determines whether a provision
should be madefor impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "impairment of Assets". Where the recoverable
amount of any fixed assets is lower than its carrying amount, a
provision for impairment loss on fixed assets is made.
F. Depreciation
i) Depreciation on Fixed Assets has been provided on Straight Line
Method as per the rates specified in Scheduled XIV of the Companies
Act, 1956.
ii) Depreciation on assets acquired/sold during the year is provided on
prorata basis.
G. Investments
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investment and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
H. Employee Benefits
i) Companys contribution to Provident Fund and other funds for the
year is accounted on accrual basis and charged to the Profit and Loss
Account for the year.
ii) Retirement benefits in the form of gratuity are considered as
defined benefit obligations and are provided on the basis of the
actuarial valuation, using the projected unit credit method as at the
date of the Balance Sheet.
I. Valuation of inventories
Inventories are valued at lower of cost or net realizable value.
J. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are
incurred.
K. Foreign Currency Transactions
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
L. Treatment of Contingent Liabilities
Contingent liabilities are disclosed by way of notes to accounts.
Disputed demands in respect of income tax and other proceeding are
disclosed as contingent liabilities. Payments in respect of such
demands, if any are shown as advances.
M. Accounting for Taxation of Income Current taxes
Provision for current income-tax is recognized in accordance with the
provisions of Indian income- tax Act, 1961 and is made annually based
on the tax liability after taking credit for tax allowances and
exemptions.
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the balance sheet date. The effect of a change in tax rates
on deferred tax and assets or liabilities are recognized in the period
that includes the enactment date. Deferred tax Assets are recognized
only to the extent there is reasonable certainty that the assets can be
realized in the future. Deferred Tax Assets are reviewed as at each
Balance Sheet date.